Business Strategy : Nike
Source: Nike Logo
- Is Nike trying to supply products for too many sports? Should Nike narrow its product line in athletic shoes?
Nike being largest seller of athletic footwear and athletic apparel in the world with subsidiaries in over 200 countries across the world has attempted to keep itself on the cutting edge of technology. Yes, Nike is supplying products for many sports like for instance, basketball and tennis and even football. Nike has been launching new technically advanced shoe models from time to time, backed by innovative advertisements, celebrity endorsements, successful associations and event sponsorships. Yes, the company may narrow its product line of athletic shoes maybe, Nile will decide to strengthen its management, overhaul its information systems and streamline supply chain management to achieve growth through market tactics that may cater to standard footwear, apparel, equipment, and accessory products as such the footwear products were mostly produced outside the US, while apparel and equipment were made both in the US and abroad.
Nike's athletic footwear products were worn for casual or leisure purposes such as in the sports of running, basketball, children's, cross-training and women's shoes were Nike's top-selling product categories. Nike also offered shoes designed for outdoor activities like tennis, golf, soccer, baseball, football, bicycling, volleyball, wrestling, aquatic activities, hiking and other athletic and recreational uses. Nike sell sports apparel, athletically inspired lifestyle apparel as well as athletic bags and accessory items. Nike markets footwear, apparel and accessories and also engaged in selling sports balls, timepieces, eyewear, skates, bats, gloves and other equipment designed for sports activities, swimwear, cycling apparel, maternity exercise wear, children's clothing, school supplies, timepieces and electronic media devices and also line of dress and casual footwear, apparel and accessories for men and women
- What types of acquisitions would you suggest to Philip Knight for Nike?
The type of acquisitions for Nike, one it can be acquiring better monitoring for its suppliers as Nike has pushed its suppliers to obey standards through increased monitoring and inspection efforts. For example, all potential Nike suppliers must undergo SHAPE inspection to be conducted by Nike production staff in order to see if they meet Nike’s standards for a clean and healthy workplace, respectful labor-management relations, fair wages and working conditions and minimum working age. Nike company should push through the development of grading system for its suppliers, which it will use to determine future orders and thus create a strong incentive among its suppliers to improve working conditions. Nike will have to explore innovative incentive schemes that will reward good corporate citizenship among both its suppliers and its own managers.
There is also the need to acquire television and media tools for their advertising promotion of products that is inn partnership with its advertising agency and will continue acquiring and create certain attention-grabbing advertising such as cinema epic of soccer players battling it out in the hull of a ship of World Cup and or Pete Sampras and Andre Agassi playing tennis in the streets of Manhattan as the shoe market that works with the natural motion of the foot to make it stronger, it gives people the ability to become stronger, better athletes. The need to acquire relevant website that is free as Nike understands that its consumers seek information online and as such it targets different online audiences around the world. The Internet has become an essential component in Nike's marketing campaign. Nike produces a range of products which are unique to a particular sport or athletic endeavor. Nike's marketing takes into account the different needs of athletes and consumers and uses its website to communicate with these groups via in depth content, product information and athlete insights. The website will explain how the shoe was developed and the benefits of the training shoe. The site is to be lively and colorful, featuring development of Nike. The site challenges visitors to learn, providing them with the tools and information to decide and act for them. Offered in a range of languages, the site utilizes a number of sportsmen and women to showcase how each person left their old self behind and worked to change themselves into a better and stronger athlete.
- Should Nike begin producing some of its own products?
Nike should begin to produce own products as the componay produces wide range of sports equipment. Their first product were basketball and running shoes. They currently also make jerseys for a wide range of sports including football, baseball, tennis, soccer,lacrosse,cricket, and golf. The most recent additions to their line are the Nike 6.0 and Nike SB shoes, designed for skateboarding. Nike products are manufactured in more than 700 factories and have broadened its product range. Nike has been able to develop long-term relations with several large Korean and Taiwanese firms. With some of these firms, Nike designers create and then relay via satellite new footwear designs and styles for upcoming seasons to suppliers, who in turn, develop the prototypes. Once these prototypes are approved, these lead suppliers fax the product specifications to their various plants throughout Southeast Asia, where production can take place almost immediately. The level of trust and coordination facilitates both production and compliance activities for Nike. In apparel, given short product cycles and volatile trends, the situation is completely different. Given that different apparel suppliers specialize in particular products or market segments, shifts in consumer preferences or fashion trends could translate into very short-term contracts with and/or limited orders from Nike. Thus, Nike brand shoes of influence which Nike has with these suppliers as well as its ability to monitor on a regular basis the production processes and working conditions of these factories.
- Is Nike taking the correct approach in marketing its shoes internationally?
In most of its business operations, Nike has done proper approach in marketing globally in its footwear products as Nike brought inspiration and innovation to athletes in the world and it considers everybody to be an athlete! As a high profile, industry-leading sports company, Nike continually strives to keep itself at the forefront of product innovation and design as Nike integrates widespread research and development and globally, Nike Free shoe was created in response to the recognition that barefoot running can strengthen athletes' feet and legs naturally. Nike then developed strategic market promotion campaign as Nike hopes to deliver the message that Nike Free is not designed to replace athletic performance footwear but to be an important part of training, thus improving performance. However, the mix of product sales may vary considerably from time to time as a result of changes in seasonal and geographic demand for particular types of footwear, apparel and equipment. Because NIKE is a consumer products company, the relative popularity of various sports and fitness activities and changing design trends affect the demand for our products. We must therefore respond to trends and shifts in consumer preferences by adjusting the mix of existing product offerings, developing new products, styles and categories, and influencing sports and fitness preferences through aggressive marketing.
- What changes in product and advertising should the company pursue to appeal to the aging baby boomers? To generation Y?
In order for Nike to have great appeal to aging baby boomers, the company will have to look out for such ways and strategies for customers that gives positive impact like having advertisements and product campaigns that serves and caters to the age group and be able to reach out in novel way and allow them to fully interact with the brand of their taste. For example, engaging to Instant Messenger deal that booms in such Online capabilities creating an excellent ideas and concepts in catching the desired age group of specific audience type respectively. Thus, for the generation Y, there is always changing approaches to style in presenting advertisements that can be in a form of a reality situation or scenario that is common to almost all generation Y as Nike can process innovative discoveries and be able to deliver an effective campaign simply across markets for the group like for example, there maybe drives awareness of the Nike football game and effectively engage its target audience with the themes of Ole campaign in Europe. Nike identified its target audience as the youth market and wanted a compelling solution to effectively reach its audience as the audience comprises the competitive arena so for Nike, MSN can serve as ideal medium to communicate with its target market as there can offer advertisers access to huge European audience.
- How can Nike maintain a competitive advantage over Reebok?
Accordingly, Nike's mission is to bring inspiration and innovation to every athlete in the world and that Nike can maintain competitive advantage over Reebok in the sense that Nike creates goods for such range of sports, they have competition from every sports and sports fashion brand. Amicably, although Nike had no direct competitors because there was no single brand which could compete directly with Nike's range of sports and non-sports oriented gear until Reebok came along. Nike can maintain competitive advantage over Reebok by means of technology innovation meaning, trying to discover more ways in style and quality of serving their valued customers and always have the touch for the youth. Thus, involving in more precise research and developmen is a great advantagge as Nike will have to basically identify certain physiological needs of athletes and plan out product designs based on those needs and possibly have useful array of measurement and analysis tools. The use of best devices like, high speed video cameras that capture soccer kick data and a scanner that produces and there captures perfect 3D digital image of customer’s foot.
However, idea has led to biomechanical research project to know what happens when we run barefoot. Sports shoes provide a certain amount of control and cushioning based on the notion that they are needed to complement the natural action of the foot as Nike had the most comprehensive picture of the biomechanics of barefoot running ever developed. The key of Nike shoes is the outersole which can move and flex independently with each section being sliced so that the foot is allowed to move as naturally as possible in the shoe and are meant to be used in tandem with other training and racing shoes. The challenge for Nike's advantage is the development of a product that measure improvements from within athletic performance but are to be flew in faces of such conventional perception.
- Is Nike responding correctly to concerns about the treatment of employees in international manufacturing facilities?
In general notion, Nike respond correctly to concerns about the treatment of employees in international manufacturing facilities for instance, in terms of independent contract manufacturers as they produce almost Nike's products, meaning that the factories manufacturing Nike products are owned and operated by outside suppliers. Worldwide, certain 800 factories employing almost 650,000 workers, form part of the contract factory supply chain that produces Nike products as there employs female workforce but, Nike took a first step to improving working conditions on the factory floor by adopting a Code of Conduct that outlined expectations for contract factories around labor and environment as well as safety and health. Some of Nike’s Code of Conduct and labor standards speak out that the company responds to treatment of employees globally such as the following:
Ø contractor must not use forced labor
Ø contractor should not employ any person below the age of 18 to produce footwear or below the age of 16 to produce apparel
Ø minimum wages, benefits and maximum hours of work are set
Ø specific environmental, safety and health policies have been set for contract factories
Ø adequate documentation must be kept by contract factories to demonstrate compliance with the Code of Conduct and required laws. For the full Code of Conduct visit www.nikeresponsibility.com
- How much emphasis should Nike place on increasing international sales?
The advertising and marketing campaigns are to be carefully crafted to ensure that consumers recognized Nike as a training shoe which could help build additional strength and therefore the ability to train longer and not as replacement to its other sports shoes. Nike by continuously improving the work it does in the area of corporate responsibility, Nike has started a journey in which it aims to help to provide solutions to difficult global issues relating to working conditions in contract factories, developing sustainable products and improving the health and welfare of children around the world. There will continue to be many challenges along the road including improving its corporate responsibility business model, working with the wider industry and contract factories to address positive, long-term change and focusing on raising the standard of consistent and transparent monitoring.
The product positioning was a balancing act, requiring careful communication and application. Nike as leader in the global sports shoes industry announced a vastly improved performance, earning almost $1 billion on sales of $12.3 billion. The placing of emphasis on increasing sales as the earnings had increased by 27 percent while orders worldwide went up by 10.7 percent. Nike's return on invested capital was 22 percent up from 14 percent and having completed a $1 billion share repurchase, Nike had plans to buy back shares worth $1.5 billion over the next four years. Nike had operated on instinct, often guessing how many pairs of shoes to produce and hoping it could offload them in the market. In the past few years, Nike had tried to balance creativity with a strong business focus. Nike had overhauled its information systems to get the right number of shoes to the market more quickly and also streamlined logistics and strengthened its management team.
- Has Nike chosen the appropriate targets for new marketing efforts? Can the company be successful in gaining market share among women?
Nike may not chose the appropriate targets for fresh efforts in marketing but because athletes in today’s epoch does not only cater to male even tough most of extraneous sports are for men but women athletes should not be stereotyped and left behind the scene. Thus, as reflected in the company statement, there implies outward look and focus on needs of athletes and because they have the responsibility work, consideration is given to the needs of communities around the world that can truly gain a fair market share in women as there continue seek the right positive way in order to innovate, design and develop products to improve athletic performance for men and women. The overriding desire is to design products with true performance innovation and technology benefits which help the athlete perform better and with recent innovation, Nike designers have developed certain sports shoes only for women that was also foot strengthening training tool and copy the idea of running barefoot in lieu of gaining flexibility and range of motion which leads to better performance.
The athletic footwear, apparel and equipment industry is keenly competitive in the United States and on a worldwide basis and Nike compete internationally within increasing number of athletic and leisure shoe companies, athletic and leisure apparel companies, sports equipment companies and such companies having diversified lines of athletic and leisure shoes, apparel and equipment, including Adidas and others. The intense competition and the rapid changes in technology and consumer preferences in the markets for athletic and leisure footwear and apparel, and athletic equipment, constitute significant risk factors in Nike’s operations. There has to be ample performance and reliability of shoes, new product development, price, product identity through marketing and promotion and customer support and service are important aspects of competition in the athletic footwear, apparel and equipment industry. Nike is competitive in every aspects of the business that can be focused on women.